I review the list of dividend increases every week, as part of my portfolio monitoring process. I leverage several of my dividend investing resources for this effort.
I started by reviewing the list of all dividend increases for the week. I then narrowed the list down to the companies that have managed to boost dividends for at least ten years in a row. I also focused on companies that had a meaningful combination of yield and dividend growth.
The companies for this week’s review include:
Realty Income Corporation (O) engages in the acquisition and ownership of commercial retail real estate properties in the United States. The company leases its retail properties primarily to regional and national retail chain store operators.
The monthly dividend company increased its monthly dividend to 23.25 cents/share, which is a 3.10% increase over the dividend paid during the same time last year. During the past decade, Realty Income has managed to raise dividends at an annualized rate of 4.70%. Realty Income is a newly minted dividend champion, as it has increased dividends for 25 years in a row.
Funds from Operations is the metric used to evaluate the fundamental performance of REITs. Realty Income has managed to boost FFO form $1.84/share in 2008 to $3.12/share in 2018. The REIT estimates FFO/share for 2019 to be in the range of $3.26 to $3.31/share.
The REIT is overvalued at 23 times forward FFO right now. Realty Income yields 3.65%. Realty Income may be worth reviewing on dips below $66/share ( 20 times FFO) or on dips below $70/share ( 4% yield). Check my analysis of Realty Income for more information about the REIT.
Fastenal Company (FAST) engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, and internationally. It offers fasteners, and other industrial and construction supplies under the Fastenal name.
Fastenal hiked its quarterly dividend by 13.60% to 25 cents/share. This marked the 22nd year of consecutive annual dividend increases for this dividend achiever. Fastenal has managed to grow dividends at an annualized rate of 17.10% during the past decade.
Between 2008 and 2019, the company managed to grow earnings from 47 cents/share to $1.38/share.
The company is expected to earn $1.45/share by 2020.
The stock seems richly priced at 25.40 times forward earnings. Fastenal yields 2.70% however, which is a nice yield, coupled with a nice dividend growth. Check my analysis of Fastenal for more information about the company.
Consolidated Edison, Inc. (ED) engages in regulated electric, gas, and steam delivery businesses in the United States.
Con Edison raised its quarterly dividend by 3.40% to 76.50 cents/share. This was the 46th consecutive annual dividend increase for stockholders of this dividend champion. Con Edison has managed to grow dividends at an annualized rate of 2.30% during the past decade.
Earnings went from $4.37/share in 2008 to $4.42/share in 2018. The company is expected to earn $4.52/share in 2020.
Con Edison is richly valued at 20 times forward earnings, and yields 3.40%. Given the low yield, and the low dividend growth, I view Con Edison as a hold at best.
Alliant Energy Corporation (LNT) operates as a utility holding company that provides regulated electricity and natural gas services in the Midwest region of the United States. It operates through three segments: Electric, Gas, and Other.
The company just hiked its quarterly dividend by 7% to 38 cents/share, marking the 17th consecutive annual dividend increase for this dividend achiever. The company has managed to boost distributions at an annualized rate of 6.60% during the past decade.
The company managed to grow earnings between 2008 and 2018 from $1.30/share to $2.19/share in 2018. The company is expected to earn $2.42/share in 2020.
The company is overvalued at 23.60 times forward earnings, and offers a dividend yield of 2.65%. I like the growth in earnings per share, but would prefer a lower entry valuation as a start.
CMS Energy Corporation (CMS) operates as an energy company primarily in Michigan. The company operates in three segments: Electric Utility, Gas Utility, and Enterprises.
CMS The company increased its quarterly dividend by 6.50% to 40.75 cents/share. This marked the 13th consecutive annual dividend increase for this dividend achiever. Over the past decade, CMS Energy has managed to boost distributions at an annualized rate of 11.80%.
CMS Energy managed to boost earnings from $1.20/share in 2008 to $2.32/share in 2018.
The company is expected to generate $2.67/share in 2020.
The stock is overvalued at 24.60 times forward earnings, and yields 2.50%. The valuation is high for a utility, despite the earnings growth over the past decade. I would prefer a better entry valuation as a start.
Enterprise Products Partners L.P. (EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company operates through four segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services.
The partnership increased its quarterly distribution to 44.50 cents/unit, which is an increase of 2.30% over the distribution paid during the same time last year. During the past decade, the partnership has managed to boost distributions at an annualized rate of 5%. The partnership has managed to hike distributions for 21 years in a row.
Enterprise Products Partners yields 6.20% today. It is one of the best managed pipeline MLPs out there. However, it is likely that it would convert to a corporation at some point in the near future, which could trigger taxable events for limited partners.
ONEOK, Inc. (OKE) engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates through Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments.
ONEOK increased its quarterly dividend to 93.50 cents/share, which represents an increase of 8.7% over the distribution paid during the same time last year. ONEOK has managed to boost dividends for 17 years in a row and spots a ten-year annualized dividend growth rate of 17.30%.
ONEOK yields 4.80% today.
This is a list of companies for further review. Most seem attractive as businesses, but that doesn’t mean that they should be invested in at any price, regardless of valuation.
Relevant Articles:
- Six Companies Rewarding Their Thankful Shareholders With a Raise
- Ten Dividend Increases For December 16 - 20, 2019
- Eleven Companies Spreading Holiday Cheers To Shareholders
- Ten companies delivering value to their shareholders